According to American management consultants, Mercer, who regularly survey costs of living in major cities throughout the world, South Africa has two of the world’s cheapest cities in which to live. Some of the results thereof were published in Moneyweb in June 2016.
Of 209 cities surveyed by Mercer this year with number one as the most expensive, Johannesburg came out 204th and Cape Town 208th. Windhoek (Namibia), also in Southern Africa came out cheapest. Out of the ten cheapest there were six cities in Southern Africa. One of the world’s most expensive however is also a near neighbour – Luanda (Angola) - which is second behind only Hong Kong which was in first place in the survey this year. The other African cities in the ten most expensive are Kinshasa (DRC) and Ndjamena (Chad), which we found a little surprising. Durban was not surveyed by Mercer, and its residents generally claim that it is significantly cheaper than both Joburg and Cape Town.
We also have always felt that for corporate expatriates, Cape Town is a more expensive location than Johannesburg, especially when it comes to renting good quality accommodation in a nice area. Suburbs in Cape Town’s Atlantic Seaboard feature some of the most expensive real estate in the country. Recently a house there sold for US$20 Million, apparently the highest price ever realised for a home in South Africa. Johannesburg, as South Africa’s economic powerhouse, with a far bigger economy than Cape Town, also does have some expensive suburbs and properties.
Currently rental property in Johannesburg is something of a buyer’s market though, with high availability. Mercer’s survey gives Johannesburg’s median monthly rental for a 2-bed apartment as around $1,500 per month (ZAR 22,000 in our money), compared with $5,000 in New York and $6,500 in Luanda and Hong Kong. If one wants to live in a three bedroomed house the differences are even more striking. Joburg’s median rent for one is just under $2,000 whereas a renter will be asked to pay around $9,500 in New York, over $12,000 in Hong Kong and typically more than $15,000 per month in Luanda! One could buy such a house in Joburg for the price of a year’s rent in Luanda. It’s all about supply and demand, and petrodollars.
When it comes to buying a beer, Johannesburg is similarly a lot cheaper than other places in the survey, especially East Asia. In Joburg you will pay around a Dollar (obviously not a restaurant or club price!), compared with $1.95 in New York and over $2.20 in Singapore. A litre of milk on the other hand is a similar price in Joburg and New York, also at around a Dollar. In Singapore it will set you back $2.50 and in Hong Kong nearly $4.00! Something we all need regularly is a cup of coffee, and the price for that simple item seems to vary wildly. In Joburg it is a very reasonable $1.20, and in New York it will cost a little over $2.00. In the Asian cities however prices are very different – around $4.50 in Singapore all the way up to nearly $8.00 in Hong Kong according to Mercer.
Cost of living surveys by their nature are selective, and can only sample commodity type items that can be compared between one place and another. At Intouch Relocations, we have always considered that the best value for people coming to South Africa is to be found in our hospitality industry. Our hotels and guesthouses offer remarkable value in terms of both price and quality, especially outside the main business centres. Restaurants, especially in Cape Town, offer world class cuisine as well as “hit-the-spot” family fare, at prices that startle the newly arrived for their value.
Coupled with Joburg having what some consider the best climate in any major city in the world, it really isn’t a hardship posting. Security is of course an issue, but given sensible precautions, generally less stringent than many cities in the Americas, there is no reason to feel unsafe. A few years ago in a survey of their expat clients by HSBC as to their favourite city to live in, Joburg came in third overall behind only Vancouver and Bangkok. In some categories polled (ease of settling-in was one) it came in first place.